WHAT IS BANKRUPTCY
It is the inability to pay your creditors.
There are two routes to bankruptcy, the act of being made bankrupt, this can be done by any creditor that you owe £750 or above to and the act of declaring yourself bankrupt.
There are advantages and disadvantages with declaring yourself bankrupt. If you have debts over £10,000 with no personal assets ie a home with equity in it, vehicles, employment with a disposable income. You are in receipt of benefits and the effects of a bankruptcy on your life will not cause you any problems. Then it could be that bankruptcy is your answer, as after being discharged it will wipe out all of your debts [excluding student loans, money owed through crime and Court fines].
Bankruptcy forms can be obtained from any County Court that has an Insolvency section. Ironically it will cost you to make yourself Bankrupt. £150 in Court fees and £310 for the Insolvency Service fees.
Before taking this course of action you should take advice.
You should look at a IVA to see whether this would suit your circumstances.
The main disadvantages of Bankruptcy are:
BANKRUPTCY BY CREDITOR.
This is where you owe a creditor a sum of money over £750 and the creditor issues a STATUTORY DEMAND against you. A Statutory Demand is an important document that must be addressed within a specified time. If you have any reason to object to that said by the creditor as to the sum claimed in the statutory demand, you have from being served with the document a very limited time to make an application to have the order set aside. At this time it is 18 days from being served (you are usually served a statutory demand by hand).
If you are served one of these, seek advice immediately. If you do not apply for the demand to be set aside within the 18 days then after 21 days a creditor can petition for your bankruptcy.
With Self Bankruptcy and Bankruptcy by Creditor if the Official Receiver believes or discovers that you have been deliberatly dishonest or misleading in what you have declared he may issue a Bankruptcy Restriction Order which can last for upto 15 years before you are discharged.
Once you have been made bankrupt you then financialy are under the control of the Official Receiver who will appoint a Trustee to administer you. They can sell everything you personally have and own apart from the basics and tools you need to continue your trade
This is a very simplistic basic explanation of bancruptcy.
YOU SHOULD AT ALL TIMES TAKE PROFESSIONAL ADVICE